Millionaires' row for just $140

Sitting pretty . . . Jack and Cath Scott at their Hunters Hill home which they built on a block of land they bought nearly 50 years ago via a Crown lease for a nominal £400. Photo: Grant Turner

Some first-home buyers got a great deal back in the 1950s - cheap living forever, writes Brian Robins.

It was one of the great giveaways of the postwar era, as the State Government balloted off hundreds of blocks of land in perpetuity for low annual rentals to get first-home buyers started.

Fifty years on, the blocks carry peppercorn rents of $140 a year, which in some cases is far below the original rental, and they are bought and sold as if they were freehold.

These days, the rent barely covers the cost to the Government of administering the leases.

The Crown leasehold blocks are in locations as diverse as Hunters Hill, Bateau Bay on the Central Coast and Hyams Beach on the South Coast, on land that today is worth hundreds of millions of dollars.

Under the original ballot rules, it was 10 per cent down and a proviso that a home be built within a year or the site be forfeited. Successful bidders won a lottery that has continued to jackpot over the years, as property prices have spiralled upwards - all with a negligible return for taxpayers.

In Sydney, along with land at Hunters Hill, there are blocks of Crown leasehold land in suburbs as diverse as Randwick, Kingsford, North Manly, Allambie Heights, Beacon Hill and Concord.

The manager of Crown land information for the Department of Lands, Jeff Green, said the Government was now anxious to convert this Crown leasehold into freehold.

But with surging property prices, many of the leaseholders cannot afford to consider it. "If you do buy, you pay the unimproved value, which is $511,000," says Jack Scott, of his block of Crown leasehold land Hunters Hill.

"I paid £400 for this block in 1954. I pay the $140 fee, half every six months.

Mr Scott argues that it is not worth his while to buy the freehold, since the annual rent is only $140.

On the South Coast, much of the Crown leasehold property is held by residents of Canberra. As property prices have risen, many of these weekenders are now liable for property tax.

But as these properties are often held by residents of another state or territory, they fall under the radar for application of property tax. As a senior official with the Office of State Revenue put it: "If you are aware of cases, please let us know."

Durras, a picturesque village just north of Batemans Bay, has a large number of holiday houses owned by Canberra residents. Some of the land was almost given away by the NSW Government.

A retired federal public servant, Ken MacDonald, went into a ballot for land at Durras 45 years ago and won a block under a weekend lease, which was reclassified subsequently to a perpetual Crown lease. The land didn't cost him anything, he said.

"My main property is in Canberra. [Durras] is a second house," Mr MacDonald said. He said it would cost $120,000 - today's estimated value of the land - to convert his weekender to freehold title. "It's prohibitive to buy there now," he said.

Mr MacDonald's property may fall below the property tax threshold of $261,000 for a second property, but an increasing number of properties along the coast are now hit by the tax following the explosion in property prices.

Much of the Crown leasehold land held by residents may be converted to freehold at the so-called notified value - the value nominated when the land was leased originally. This may apply particularly to land in the Sydney area. Other sites, such as property included originally in weekend leases, would be converted at present market values.